October 13, 2010

Generalia on contract law: Notions of contract

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In spite of a common basic concept in contract law, that consensus about the contents of contract, which are expressed by the contracting parties with the intention of creating a legal relationship, should result in the conclusion of contract – astonishingly, the definitions underlying the notion of contract diverge in the particular legal systems of Europe.

Correspondingly, certain legal systems place further demands on a legal formation of contract, e.g. the requirements of “consideration” in England and “objet” and “cause” in France; furthermore, they attach different importance to the subjective intention of a person to perform a juristic act, from which a contractual liability may arise.
The different approaches referring to this are well visible in the Trier wine auction case, where a person, who visited a wine auction and waved to a friend, had been awarded the contract.


For the common law, the intention, which exists in each party’s mind, doesn’t matter that much, than the circumstances, whereby the other party could reasonably understood what was expressed. Seeing that contractual liability may be imposed by law because of the party’s behaviour, the inadvertent bid has to result in the formation of a contract.

In France, the main emphasis is put on the voluntary nature of contractual liability, whereby the creation of contract requires an agreement in a subjective sense. Thus, if this case had to be decided under French law, a contract could not have been constituted without a legally significant declaration of intention.

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Following the prevailing case law, whereupon the aspect of legal certainty constitutes the decisive factor, German lawyers focus on the outward appearance, regardless of whether the behaviour coincides in the intention of the promisor. Thus, the highest bidder’s statement of purpose becomes legally valid- however, an opportunity to rescind under §119 BGB does exist, related to a compensation for reliance damage, §122 BGB.

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